Pell Grant and Higher Education Access: It’s not as simple as it seems

December 4, 2014

Pell Grant and Higher Education Access: It’s not as simple as it seems

The Pell Grant is the major federal student financial aid program in Title IV of the Higher Education Act. What began in 1972 as the Basic Opportunity Grant, worth just several hundred dollars a year, has grown into a $32 billion program providing grants of up to $5730 per year to about 10 million low income students.

Various ranking publications, as well as the White House and Education Department, look at the percentage of Pell Grant recipients enrolled at a particular college as an indication of that institution’s commitment to access and to socioeconomic diversity. This simple but misleading measurement is further complicated, when making a case for a college’s commitment to access, by the use of the undefined term “need blind” (as in not being aware of financial need when a college makes an admission decision on a student). Both criteria are flawed — an institution’s financial strength, or lack thereof, must be considered along with their aid practices before judging an institution’s true commitment to access.

Last month, the Lehigh Valley’s (PA) major newspaper, the “Morning Call,” published a story about area colleges and their commitment to access as measured by the number of Pell Grant recipients enrolled and the practice of being “need blind” or “need aware” in admission (http://touch.mcall.com/#section/1742/article/p2p-81851011/). The author praised public institutions like Kutztown University for enrolling a large percentage of Pell recipients (32%) and private colleges like Cedar Crest (43%) and Moravian (30%) for their tremendous efforts as well. Conversely, the author implied that Muhlenberg (8%) and Lafayette (11%) were clearly not as committed to access and, unlike the others, were also not need blind in admission meaning that “a mediocre applicant may be accepted because of his or her family’s wealth, while an equivalent student with less money would be rejected.” Horrible! Unconscionable! Not so fast.. It isn’t that simple!

Let’s understand this: there are only three types of institutions that do not take financial need into consideration at some point (for selective colleges, usually the last 10% or so of the spaces available) in the admissions process:
1) the wealthiest colleges and universities in the nation, with strong market position, endowments that pay for most if not all of the scholarship and grant aid, and a commitment to fully fund every needy student, leaving no gap (as the institutions in 2 and 3 below do) between what a student needs to attend and what the college provides in financial aid;
2) private institutions with below average endowments and weak market position because they cannot afford to deny qualified students and risk being under capacity…AND because they do not meet a student’s full financial need with institutional grant (which means it doesn’t “cost” the institution any additional aid to admit another needy student); and
3) public institutions, because most do not provide institutional grant aid, so whatever federal or state money a student gets is all they will get, regardless of financial need.

The bulk of the other private colleges — those with strong market position and resources but not in the very top group – neither “gap” students (they meet full need) nor do they accept very needy, marginally qualified students toward the end of the admission process. They believe it is far better to make a commitment to needy students by fully funding those they admit (so that they can graduate on time with manageable debt) than by admitting more students than they can afford to assist, thereby leaving them to fend for themselves should they decide to attend. These students typically wind up borrowing more than they should to fund their education and their attrition rate is typically high.

I have a great deal of respect for my colleague Tom Mortenson, who has devoted his career to the advancement of post secondary opportunity. But I take great issue with his statement to the “Morning Call” in their story on local colleges and Pell enrollments. “…schools with high tuition and a very low percentage of Pell Grant students are not committed to serving low income students. They are committed to maximizing tuition revenue.” In most cases, this is simply not true, though I would say that these schools do need to maximize tuition revenue in order to fully fund low income students since, unlike the wealthiest colleges in number 1 above, their scholarships are not primarily funded through the endowment but, indeed, through tuition revenue. In other words, you have to collect the revenue in order to give it away.

I also appreciate what the chief enrollment officers at Lafayette and Muhlenberg said in the story– that they choose to define economic opportunity more broadly than only by those eligible for the Pell Grant; that they partner with community-based organizations to identify students for whom their institutions would be a financial reach; that they are committed, too, to helping students from lower middle income families who may not be eligible for the Pell Grant but who are increasingly squeezed out of private higher education.

So, those colleges with a high percentage of Pell recipients are committed to enrolling low income students and those who have lower enrollment percentages are not? Hardly. What the numbers don’t tell us is this — although there are some exceptions, in general:

1) Colleges with significant resources to meet full need AND to enroll a high percentage of Pell recipients will meet the needs of those students without excessive reliance on loans.
2) Those institutions with significant resources to meet full need, but that are need aware in admission because their resources are not sufficient to meet the needs of all qualified applicants, may enroll a lower percentage of Pell recipients, but those enrolled will have their full needs met without excessive reliance on loans.
3) On the other hand, under-endowed, private and public institutions that enroll a large percentage of Pell recipients will, more often than not, provide aid that does not meet full need, thereby forcing students to rely on large loans to bridge the gap between costs and affordability.

Further, in their July, 2013 report (“Measure Twice: The Impact in Graduation Rates of serving Pell Grant Recipients”) the Advisory Committee on Student Financial Assistance reported that “Overall, as the percent of students who are Pell recipients rises and endowment per student falls, average 6-year graduation rate falls from 85% to 33% (in private 4-year colleges)…(and)..from 67% to 28% (in public 4-year colleges)”

Although the institutions in number 3 above appear as though they are committed to access of low-income students as suggested by the percentage of Pell recipients they enroll, one has to ask the question, “Access to what?” If those students are either not graduating, or are graduating with debts way above the average class of 2012 student loan debt of $29,400, they will enter the work force in a financial position that is significantly behind those low income students who attended colleges with lower Pell enrollments, but higher institutional grant aid and lower loans to those Pell eligible students.

Let’s stop implying that commitment to access is measured solely by the percentage of Pell Grant recipients an institution enrolls, but rather by the percentage of Pell recipients it graduates with debt levels that are similar to the national average or lower. And let’s look at a college’s ability and willingness to meet full need without over-reliance on loans as the true indicator of commitment to low income students. If we do, our dialogue will move from finger pointing to helping students make good choices for their future.